AUGUSTA – Lost in the debate around Governor Janet Mills’ lack of proposed funding for roads after saying “Let’s fix the damn roads!” in her recent State of the State address is a piece of her budget proposal that would begin to raid a cash reserve “lock box” built by Governor Paul LePage through one of his most notable accomplishments.
In 2013, Maine’s hospitals were mired in a financial crisis. The state had not been paying bills from those hospitals for services provided to the state’s Medicaid patients. In total, Maine’s hospitals were owed more than $500 million due to Maine’s failure to pay the bills. Several hospitals were in severe financial crisis and surviving on lines of credit as a result. Rural hospitals were on the way to closing their doors.
money available as he worked to fix a serious budget shortfall that had been
perpetuated for years, Governor Paul LePage found an innovative solution. With the
state’s liquor contract up for renewal, he would renegotiate the deal (which
had been negotiated under Baldacci at a fire sale rate) and use the funds to
secure a bond to pay off the hospitals.
In the previous deal under Governor John Baldacci, the state sold the ten-year liquor contract up front for $125 million. Under LePage, the state received $46 million in the first year and has maximized the value of the liquor contract to Maine taxpayers.
Beyond the difference in the success of the negotiation was that LePage’s proposal left the funds sitting in reserve as the bond used to pay the hospital debt was paid off. Under the LePage model, the fund was essentially a savings account that could be put to future use for a major initiative or set aside to bolster the state’s rainy day fund once the bond was paid off.
But now, Governor Janet Mills is proposing to start drawing down funds from the liquor revenue reserves before the bonds are paid off. The proposal, tucked into her latest state budget proposal, would send $20 million from the liquor contract cash reserves and send it to the general fund to continue growing government spending.
non-profit group Maine People Before Politics monitors Governor Janet Mills’
policy proposals and the state budget closely and they sounded the alarm on Mills’
the law to allow Governor Mills to shift $20 million from the revenue bond,
where it cannot be spent until the borrowing is paid off, to the General Fund
is playing a shell game with our savings,” said Maine People Before Politics in
contract reserve fund is part of the record cash pool Governor Paul LePage built
for the state, but it came under harsh criticism from some liberals, who
believed the money should be spent, not saved.
latest proposal she proposes adding more than $120 million to the state budget,
but $46 million of that is through using one-time funds that will not be
available in the next state budget.
the most criticism of Mills’ latest budget proposal appears to be the result of
lack of funding for roads and bridges.
During her State
of the State address, Mills said “Let’s fix the damn roads!” -referring to
Maine’s deteriorating infrastructure after she failed to increase funding for
roads in her state budget last year – even canceling some road contracts.
In her new budget
proposal, Mills proposes only adding another $10 million in funding for Maine’s
roads, despite the Blue Ribbon Transportation Commission created by Mills saying
the state is facing a funding gap of about $140 million per year. Many fear
that Mills’ underfunding of roads is part of a political chess game she is
playing to force one of several gas tax increases or toll proposals into law,
which would drive up the cost to drive in Maine, especially for rural Mainers.